Steve Walker, Managing Director, Promise Solutions

Financial Reporter had a chat with Steve Walker, managing director of Promise Solutions, about secured lending regulation and plans for the year.

Related topics:  In The Spotlight
Amy Loddington
21st March 2014
In The Spotlight

FR: What kind of response have you received for your Secured Loans Club?

It’s been very positive. The conversations we’ve been having with brokers have just reinforced my thinking that they aren’t really prepared for secured loans and they recognise the need to take action right away. And, to do that, they need the right systems and processes in place.

As a result of that we’re looking at taking things a little bit further and designing a compliance package which sits alongside the technology on offer so that we can help those brokers who perhaps haven’t thought about their systems and controls. We’re talking to external consultants now to try and put together a package that they can subscribe to.

It’s aimed more at loan packagers rather than introducers. As far as introducers are concerned they too have not grasped the fact that secured loans will change and it’s the same with many networks. So there’s lots of conversations taking place.

If I was to summarise the reaction in one word I’d say ‘surprise’.

FR: What do you predict for the regulation of secured lending?

In the first instance it will create an expectation within businesses that they need to do things differently.

The FCA will apply the OFT guidance and CCA rules and expect firms to demonstrate compliance in a similar manner to that seen in the mortgage sector.

Over the last few months I’ve been going to see some sizeable mortgage brokers and, I’m pleased to say, the attitude for them is “We will treat loans in exactly the same way as we treat mortgages” which is the drum I’ve been banging for a long time.

Unfortunately a number of networks are remaining quiet on the subject so the question is what will they be saying to their members on April 1st? Continue with secured loans in the wat you always have? With no research, no audit, no compliance records? Or do something different?

FR: Secured lending has continued to rise over the last 12 months – why do you think the demand has continued to grow?

Many factors. Firstly more loan packagers are entering the market, they are creating demand because they are effectively advertising the existence of these products.

Secondly a substantial element of the growth has come not from writing more loans, but from writing larger loans. Our average loan size is nearly double what it was a year to 18 months ago.

I also think brokers – mortgage brokers – are now starting to accept secured loans more so than they have done in the past. Many more brokers are now saying ‘I need to do something about this’ rather than thinking secured loans just aren’t on their radar. There’s an increasing awareness among mortgage brokers and this has to continue because the secured loan is going to become a sister product to a mortgage.

And of course there are more lenders entering the market. If you look at the likes of Precise and Prestige they’ve had quite an impact on the market – especially Precise as they’re already known as a mortgage brand and they’re making quite a bit of noise within the intermediary market to raise awareness.

Impending regulation is contributing somewhat as it too boosts the profile of secured loans but I don’t think we’ve seen anything like the impact of that yet. I think that’s where we’re going to see the next spurt of growth as brokers say ‘if we’re going to do secured loans we’re going to do it right’.

FR: What are your plans for Promise Solutions in 2014?

To provide more support to the industry as a whole through technology and compliance, both for introducers and for other packagers  and to work closely with those brokers and networks who want to do it right, that’s a key thing. Regarding Networks, which we see as important partners, rather than having numerous relationships, we want to forge some key relationships and really work closely with them.

In the past for lots of organisations secured loans has been about putting a tick in a box. Now it needs to be more of a partnership so we want to take more of a partnership approach to who we work with. 2014 will be about focusing on quality - the quality of the relationships, the quality of our services, quality of our technology and the quality of the lenders that we use. Quality over quantity.

FR: What advice would you give someone starting out in the industry?

Do you research, understand the industry you’re getting into. I’ve been talking to prospective lenders lately and their lack of understanding was horrific.

Partner up with organisations which have got your interests at heart and want to support you in a long term relationships rather than just seeking to convert a few loans.

It’s about the quality of the people you partner with. You will need technology. You will need a good panel. You will need people to lean on who can help you. Don’t kid yourself that you can wing it.

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